Atlas Lithium Corp annual report, FY2021

Business context and reporting period

This is Brazil Minerals, Inc.’s Form 10-K for the fiscal year ended December 31, 2021, comparing results with 2020. The filing identifies the issuer as Brazil Minerals, Inc.; the supplied metadata names Atlas Lithium Corp, so the entity relationship should be confirmed. The company’s principal focus was exploration and development of hard-rock lithium properties in Brazil, alongside early-stage battery-metal projects and interests in iron, gold, and quartzite. Its only reported 2021 revenue came from industrial sand. The company reported no mineral reserves.

Financial performance and liquidity

Revenue declined 56.4%, attributed to reduced sand demand amid pandemic restrictions in Brazil. Cost of revenue rose to $245,810 and included a $135,656 write-off of unprocessed gold- and diamond-bearing gravel; gross loss consequently exceeded revenue. Operating expenses increased 179.2%, principally from public-company and financing costs and non-cash stock compensation ($1,470,346). Other expense was $509,373, including interest and a debt-extinguishment loss.

Investing cash outflow was $288,761, compared with $13,643 in 2020; financing provided $1,789,938, compared with $1,104,549. Year-end current assets were $57,930 against current liabilities of $998,405. No convertible notes or loans payable were reported on the year-end balance sheet, but accounts payable and accrued expenses were $988,238, and total liabilities were $1,107,331. Parent-company stockholders’ deficit was $1,094,469; total consolidated equity was $456,866, including non-controlling interests.

Material changes and notable items

• Common shares outstanding increased from about 2.0 billion at year-end 2020 to about 3.1 billion at year-end 2021, reflecting equity sales, debt conversions, option exercises, and shares issued for services. The filing reports 3,192,942,056 common shares outstanding as of March 21, 2022.
• The company converted or settled significant debt during 2021, including related-party notes converted into Series D preferred stock. It said all convertible debt had been removed from the books by year-end.
• Intangible assets, principally mineral rights, increased to $1,302,440 from $407,467; the company reported no impairment of mineral rights in either year.
• Brazil Minerals consolidated Apollo Resources and Jupiter Gold as variable-interest entities because it concluded it had power over significant activities, despite owning 46.17% and 24.56%, respectively.
• The auditor issued an unqualified opinion on the financial statements but highlighted substantial doubt about the company’s ability to continue as a going concern. Management also reported disclosure controls and internal control over financial reporting were effective; the auditor did not attest to internal-control effectiveness.

Outlook, risks, and contingencies

Management said ongoing operations and growth depend on generating operating cash and raising capital through equity or debt; it gave no quantified financial guidance. It stated plans to bring a newly authorized second sand mine online in the second quarter of 2022. The filing projected quartzite operations and revenue in 2022 and Apollo Resources iron revenue in early 2023; elsewhere it gives a fourth-quarter 2022 expected start for the iron mine, so the timing is not consistent. Lithium and other strategic-mineral projects remained exploratory, with no demonstrated commercial deposits or reserves.

Principal risks include going-concern uncertainty, continued cash burn and reliance on external financing, potential shareholder dilution, mineral-price volatility, exploration and permitting uncertainty, Brazilian regulatory and environmental requirements, foreign-exchange exposure, and dependence on key management. COVID-related municipal restrictions had delayed some exploration work. The filing reports no material legal proceedings and no off-balance-sheet arrangements. It also says the company does not expect to pay dividends in the foreseeable future.

Important facts for investors to verify

1. Confirm that this Brazil Minerals, Inc. 2021 filing is the intended filing for Atlas Lithium Corp and reconcile the issuer-name difference.
2. Review the going-concern disclosure, available financing, subsequent cash position, and near-term funding requirements.
3. Verify the amount and accounting for the 2021 debt-extinguishment loss: the MD&A cites $224,812, while the financial statements report $255,991.
4. Reconcile project schedules, especially the stated iron-mine start and revenue timing, and track required permits and actual commercial progress.
5. Assess dilution and control: share issuance was substantial, one Series A preferred share held by the CEO carries 51% of total voting power, and the filing describes additional potentially dilutive securities.
6. Confirm whether exploration results support economic resources or reserves; the filing states the company had no reserves.